IR-2024-161,
June 10, 2024, WASHINGTON — The Internal Revenue Service today reminded taxpayers whose income is not subject to withholding that the second quarter estimated tax payment deadline is June 17.
Taxpayers making estimated tax payments should consider this deadline to avoid falling behind on their taxes and facing possible underpayment penalties. And the IRS reminds taxpayers that third quarter payments are due Sept. 16, and the final estimated tax payment for tax year 2024 will be due on Jan. 15, 2025.
For eligible taxpayers, disaster tax relief includes the postponement of filing and payment deadlines. For current tax relief provisions, search
Tax relief in disaster situations and visit the IRS news from around the nation page on
IRS.gov for the current list of eligible localities.
Estimated tax payments are usually made by taxpayers who are self-employed, retirees, investors, businesses, corporations and other individuals who do not have taxes withheld.
Pay-as-you-go
Taxes are pay-as-you-go, to be paid as income is earned, during the year. There are two ways for taxpayers to do this:
- Withholding from pay, pension or certain government payments, such as Social Security.
- Making quarterly estimated tax payments throughout the year.
For taxpayers where not enough taxes are being withheld from their salary, pension or other income, estimated tax payments may have to be made. Taxpayers who are employed can avoid having to make estimated tax payments by asking their employer to withhold a larger amount from their earnings by submitting a new
Form W-4, Employee’s Withholding Certificate.
Who needs to pay estimated tax?
Taxpayers including sole proprietors, partners and S corporation shareholders must make estimated tax payments if they expect to have a tax liability of $1,000 or more when they file their return.
The
IRS Interactive Tax Assistant is an online tool that taxpayers can use to see if they are required to make estimated tax payments. Taxpayers can also see the worksheet in
Form 1040-ES, Estimated Tax for Individuals, for more information about who must pay estimated tax.
Corporations that expect to owe tax of $500 or more, generally must make estimated tax payments. For more information, corporations can see
Publication 542, Corporations.
For additional details, see
Publication 505, Tax Withholding and Estimated Tax. It includes worksheets and examples that can be especially useful for taxpayers who have dividend or capital gain income, owe alternative minimum or self-employment tax or have other situations.
Keep records of income reported on Form 1099-K
Individuals working a part-time job or side hustle
must report their income. Earnings may be reported to the IRS on a Form W-2, or type of Form 1099. Recipients of
Form 1099-K, Payment Card and Third Party Network Transactions must use it with other tax records to help report income.
Taxpayers earning income not subject to withholding are encouraged to consider making quarterly estimated tax payments during the year to stay current and avoid an unexpected tax bill.
Remember, all income is taxable unless it is specifically excluded by tax law. Taxpayers should report any profits from selling goods or services, regardless of if they receive a Form 1099-K.
Paying estimated tax
Electronic payment is the most secure, fastest and easiest way for taxpayers to make an estimated tax payment. Taxpayers can use their
Online Account or IRS
Direct Pay to make a payment using their checking or savings account. A
credit/debit card or digital wallet can also be used. When using a credit/debit card, taxpayers should be aware that payment processors, not the IRS, charge a fee to do so. Payments can be made at
IRS.gov/payments and through the
IRS2Go app. Both Direct Pay and credit/debit card and digital wallet options are available.
The
Electronic Federal Tax Payment System (EFTPS) can also be used to make an estimated payment. Payment by check or money order made payable to the “United States Treasury” is accepted. For instructions and help figuring out their estimated tax, taxpayers should refer to
Form 1040-ES, Estimated Tax for Individuals.
Electronic funds transfer must be used by corporations to make all federal tax deposits, for example deposits of employment, excise and corporate income tax. Installment payments of estimated tax must also be made via this method. Usually, an electronic funds transfer is made via the
EFTPS.
Avoiding an underpayment penalty
To avoid an
underpayment penalty at tax time, taxpayers should pay most of their taxes during the year, owing less than a $1000 when filing their return. Generally, for 2024 that means paying at least 90% of the tax owed on their 2024 return, or at a minimum 100% of the tax shown on their year 2023 tax return.
Exceptions to the
Underpayment of Estimated Tax Penalty and special rules apply for some groups of taxpayers, such as farmers, fishermen, certain higher income taxpayers, casualty and/or disaster victims, those who recently became disabled, recent retirees and those who receive income unevenly during the year.
Tax Withholding Estimator
The use of the
Tax Withholding Estimator by taxpayers will help ensure that the right amount of tax is being withheld from their paychecks or other income that is subject to withholding. Estimates provided are as accurate as the information entered by taxpayers.
This tool can help taxpayers avoid having too little tax withheld and facing an unexpected tax bill at tax time next year.
24/7 assistance at IRS.gov
For assistance, tax help is available 24/7 on IRS.gov. Taxpayers can use a variety of tools to find answers to common tax questions, including the
Interactive Tax Assistant,
Tax Topics and
Frequently Asked Questions.
